High street banks kept billions safe for Gaddafi

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The world's leading financial institutions, including some based in Britain, held billions of dollars on behalf of Muammar Gaddafi's regime, a leaked report has revealed.

HSBC and the Royal Bank of Scotland were among the leading banks holding deposits of Libyan state funds. Other blue-chip firms cashing in on the lucrative business included Goldman Sachs, JP Morgan, Nomura and Société Générale. The HSBC and RBS declined to comment, citing client confidentiality.

Meanwhile, the Spanish government, which is taking part in the military action against the Gaddafi regime, announced yesterday that it is among several European countries that have received a letter from the Libyan Prime Minister, Al-Baghdadi al-Mahmoudi, offering new peace proposals.

The Independent revealed yesterday that the letter called for: an immediate ceasefire monitored by the United Nations and the African Union; unconditional talks with the opposition; an amnesty for both sides in the conflict; and a new constitution. A government spokesman in Madrid said yesterday: "Everyone is anxious for there to be an agreement... but certain steps have to be taken first and so far they haven't been taken."

The US administration declared that it would take note of the proposals but that military action would continue because the Libyan regime remained in breach of UN resolutions. British officials also confirmed yesterday that they would be sending four Apache attack helicopters to bolster the military push in Libya.

President Nicolas Sarkozy hinted last night that Western countries would be prepared to accept a new Tripoli government, one that even included senior figures from the Gaddafi regime, as long as "they don't have blood on their hands".

At a press conference at the end of the first day of the G8 summit in Deauville, France, Mr Sarkozy said that Colonel Gaddafi "must go and go soon". He added: "The future of Libya can then be decided by Libyans... including possible figures in the present regime, so long as they don't have blood on their hands."

The longer that Colonel Gaddafi waited before leaving the country, "the narrower his his choices will be", Mr Sarkozy said. "We are not discussing what the destination of his airline ticket should be, nor what class of ticket, but the longer he waits the more his choices will be limited."

Abdel-Hafidh Ghoga, vice-chairman of National Transitional Council, said the diplomatic moves were welcome. "Political processes are under way to negotiate ways for Gaddafi's exit, so in our opinion it is a matter of time for this process to come to a critical conclusion," he said.

In his letter, Dr Mahmoudi had also asked for release of the assets of the Libyan Investment Authority, frozen by the UN and the EU after the February uprising in the country.

Officials of both organisations stated that this would be up to member countries and a settlement on the ground. The campaign group Global Witness produced the report.